We’ve previously reviewed the urgent need for logistics service providers and asset operators like trucking carriers and railroads to develop a carbon strategy to reduce emissions. One of the fastest ways for payors of freight to reduce their Scope 3 emissions is mode shifting from truck to rail. Railroads account for 40% of US freight but only 1.9% of US transport emissions. The Association of American Railroads found that if 25% of the truck traffic moving at least 750 miles went by rail instead, annual greenhouse gas emissions would fall by approximately 13.1 million tons. However, there’s a solid assumption that much of the low-hanging fruit in modal shift has already happened. After all, if shippers can save freight costs and balance in-transit inventory costs, they have already likely shifted much of their volume to rail. But railroads should anticipate rising interest among customers with emission reduction targets.
The rail system in the US has an enormous opportunity to continue stealing market share from road freight by investing in additional intermodal and transload capacity. There’s no guarantee of growth or increased market share given the many challenges facing rail operators: intense competition, rising costs, declining coal volumes, and regulatory headwinds.
In short, the quickest way to cut emissions in freight is to maximize the use of rail, the most fuel-efficient mode of transportation. But shippers must remember to balance cost and service as they consider making the shift.
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